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| Downtrending market / free DP is an elevator's best friend. They have your grain, didn't have to pay you for it, they can sell it and capture the time value of money (free interest) and you're missing out on interest or paying operating interest at the bank, prices are grinding lower so you get even less for your grain eventually and they have to pay you even less, and it expires at the end of August so they can magically widen the basis another 10 cents at expiration to screw a little more money out of you without affecting the competitiveness of their bid. Plus they get more time to find buyers and source freight, which also plays to their advantage.
And if a local end user gets short of grain, they already have yours in house and can send it there instead of you capturing the improved basis. | |
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DP from end user perspective
